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Abstinence with Reputation Loss, Understating Expectations and Guiltand the Effectiveness of Emission Tax

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Abstract

The responsibility for, and consequences of, greenhouse gas emissions are shared by all countries, but only a few are willing to tax emissions. The paper argues that the reactions of the abstaining countries are crucial for assessing the effectiveness of the tax. The paper analyzes an interaction between a tax-collecting and investing coalition of rich countries, abstaining rich countries and poor countries. The non-coalition countries might have loss of reputation and guilt and overstate the tax’s emission-moderating effect. As long as these three types of countries react to their counterparts’ emissions, taxing emissions does not necessarily reduce the global emissions.

Suggested Citation

  • Amnon Levy, 2011. "Abstinence with Reputation Loss, Understating Expectations and Guiltand the Effectiveness of Emission Tax," Economics Working Papers wp11-12, School of Economics, University of Wollongong, NSW, Australia.
  • Handle: RePEc:uow:depec1:wp11-12
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    1. Selden Thomas M. & Song Daqing, 1994. "Environmental Quality and Development: Is There a Kuznets Curve for Air Pollution Emissions?," Journal of Environmental Economics and Management, Elsevier, vol. 27(2), pages 147-162, September.
    2. Fischer, Carolyn & Newell, Richard G., 2008. "Environmental and technology policies for climate mitigation," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 142-162, March.
    3. Gene M. Grossman & Alan B. Krueger, 1995. "Economic Growth and the Environment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 110(2), pages 353-377.
    4. Newell, Richard G. & Pizer, William A., 2003. "Regulating stock externalities under uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 45(2, Supple), pages 416-432, March.
    5. Hoel, Michael & Karp, Larry, 2002. "Taxes versus quotas for a stock pollutant," Resource and Energy Economics, Elsevier, vol. 24(4), pages 367-384, November.
    6. Pizer, William A., 2002. "Combining price and quantity controls to mitigate global climate change," Journal of Public Economics, Elsevier, vol. 85(3), pages 409-434, September.
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    Cited by:

    1. Amnon Levy, 2011. "Introduction to the Economics of Atmospheric Carbon-Dioxide Control," Economics Working Papers wp11-07, School of Economics, University of Wollongong, NSW, Australia.
    2. Amnon Levy, 2011. "Emission-Photosynthesis Imbalance and Climate Change:Forest Land under Intensified Uncertainty and Expected Utility Maximization," Economics Working Papers wp11-08, School of Economics, University of Wollongong, NSW, Australia.
    3. Amnon Levy, 2011. "A Stock Targeting International Carbon-Tax Rule with Uncertainty and Diminishing Compliance," Economics Working Papers wp11-09, School of Economics, University of Wollongong, NSW, Australia.

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    More about this item

    Keywords

    Emission Tax; Abstinence; Understating Expectations; Guilt; Global Emissions;
    All these keywords.

    JEL classification:

    • Q52 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Pollution Control Adoption and Costs; Distributional Effects; Employment Effects

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